Indonesian stock info - The Civets fund exotic stock markets : HSBC Global Asset Management has launched a fund which invests in a range of emerging countries that go beyond the Bric nations.
The Civets fund, which is available to both small investors and financial institutions globally, invests in Columbia, Indonesia, Vietnam, Egypt, Turkey and South Africa.
It targets long-term returns from capital growth and income by investing in a diversified portfolio of equities from the stock exchange of these countries.
The Civets nations have been identified as having the potential to outperform the now well established Brics emerging markets, of Brazil, Russia, India and China.
The fund also has the ability to invest up to 25% in non-Civets nations which have similar attractive prospects according to HSBC. These other countries include Mexico, Nigeria, Philippines, Thailand, Malaysia and Saudi Arabia.
HSBC argues that these Civet nations are among the next generation of emerging markets and echo many of the demographic qualities inherent in larger developing markets such as the Bric nations.
Over the past five years, HSBC says that Civets equities outperformed not only global emerging markets equities but also Brics equities – making it a very interesting prospect indeed.
Why the 'Civets'?
Each of the Civets countries has a relatively diverse and dynamic economy without extreme dependence on external demand or commodity exports that characterise some parts of the emerging world.
The countries also have a relatively low level of public debt as well as corporate and household debt.
Collectively, the Civets group of countries has a population of around 600m with an average age of 27, representing 8% of the global population.
HSBC has outlined its target allocation for each country. Indonesia, Turkey and South Africa will each have a 25% weighting, with Colombia having 16%, Egypt 7.5% and Vietnam 1.5%.
Nick Timerlake, the global head of emerging market equities, will oversee the overall management of the Civets fund.
The base currency of the fund is US Dollar and the minimum investment is $5,000 for retail investors, with a 1.75% annual management charge.
What about the downsides?
The first issue for UK investors in the HSBC Civets fund is currency risk. The Luxembourg-based fund is denominated in dollars, meaning returns will be affected by fluctuations between sterling and the US currency.
The Civets handle, cooked up for the basket of markets by former HSBC head honcho Michael Geoghan, is also essentially a rebranding of what has formerly been called frontier markets investing.
The advantage of that frontier markets label was that it gave some impression that investing in these markets is typically viewed as more volatile and riskier than either the established Brics or the western markets.
Some investors would disagree and argue that the Civets nations are no less stable than debt-laden western economies in Europe and America, however, in most people's eyes the Civets markets fall onto the more risky pile and that will make them more volatile.
As an example, the uprising in Egypt recently saw veteran leader Hosni Mubarak ousted, its stock market closed and the benchmark index the EGX 30 is down 24% since the start of the year.
The upshot of that riskiness is that while the Civets have great potential for growth, they could also take a tumble and this is a place for the brave and not your life savings.
The HSBC fund has a hefty $5,000 initial investment and comes with an annual management charge of 1.75%, fairly average for a fund, but high compared to the cost of investing through ETFs and investment trusts, although as of yet there are no real rivals in those fields that target the Civets.
Investors could gain themselves smaller exposure to the same markets, at a potentially lower cost, through more established emerging market funds and trusts.
The Civets fund is also not yet available through fund supermarkets, which discount or remove initial charges, although it could be in the future. Currently, investors can buy it through a financial adviser.
As ever, inexperienced investors or those who are unsure of whether they should invest in the Civets fund should consult an independent financial adviser.
The Civets fund, which is available to both small investors and financial institutions globally, invests in Columbia, Indonesia, Vietnam, Egypt, Turkey and South Africa.
It targets long-term returns from capital growth and income by investing in a diversified portfolio of equities from the stock exchange of these countries.
The Civets nations have been identified as having the potential to outperform the now well established Brics emerging markets, of Brazil, Russia, India and China.
The fund also has the ability to invest up to 25% in non-Civets nations which have similar attractive prospects according to HSBC. These other countries include Mexico, Nigeria, Philippines, Thailand, Malaysia and Saudi Arabia.
HSBC argues that these Civet nations are among the next generation of emerging markets and echo many of the demographic qualities inherent in larger developing markets such as the Bric nations.
Over the past five years, HSBC says that Civets equities outperformed not only global emerging markets equities but also Brics equities – making it a very interesting prospect indeed.
Why the 'Civets'?
Each of the Civets countries has a relatively diverse and dynamic economy without extreme dependence on external demand or commodity exports that characterise some parts of the emerging world.
The countries also have a relatively low level of public debt as well as corporate and household debt.
Collectively, the Civets group of countries has a population of around 600m with an average age of 27, representing 8% of the global population.
HSBC has outlined its target allocation for each country. Indonesia, Turkey and South Africa will each have a 25% weighting, with Colombia having 16%, Egypt 7.5% and Vietnam 1.5%.
Nick Timerlake, the global head of emerging market equities, will oversee the overall management of the Civets fund.
The base currency of the fund is US Dollar and the minimum investment is $5,000 for retail investors, with a 1.75% annual management charge.
What about the downsides?
The first issue for UK investors in the HSBC Civets fund is currency risk. The Luxembourg-based fund is denominated in dollars, meaning returns will be affected by fluctuations between sterling and the US currency.
The Civets handle, cooked up for the basket of markets by former HSBC head honcho Michael Geoghan, is also essentially a rebranding of what has formerly been called frontier markets investing.
The advantage of that frontier markets label was that it gave some impression that investing in these markets is typically viewed as more volatile and riskier than either the established Brics or the western markets.
Some investors would disagree and argue that the Civets nations are no less stable than debt-laden western economies in Europe and America, however, in most people's eyes the Civets markets fall onto the more risky pile and that will make them more volatile.
As an example, the uprising in Egypt recently saw veteran leader Hosni Mubarak ousted, its stock market closed and the benchmark index the EGX 30 is down 24% since the start of the year.
The upshot of that riskiness is that while the Civets have great potential for growth, they could also take a tumble and this is a place for the brave and not your life savings.
The HSBC fund has a hefty $5,000 initial investment and comes with an annual management charge of 1.75%, fairly average for a fund, but high compared to the cost of investing through ETFs and investment trusts, although as of yet there are no real rivals in those fields that target the Civets.
Investors could gain themselves smaller exposure to the same markets, at a potentially lower cost, through more established emerging market funds and trusts.
The Civets fund is also not yet available through fund supermarkets, which discount or remove initial charges, although it could be in the future. Currently, investors can buy it through a financial adviser.
As ever, inexperienced investors or those who are unsure of whether they should invest in the Civets fund should consult an independent financial adviser.
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